YUGANG INT'L<0613> - Announcement & Resumption of Trading
The Stock Exchange of Hong Kong Limited takes no responsibility for
the contents of this announcement, makes no representation as to its
accuracy or completeness and expressly disclaims any liability
whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this announcement.
YUGANG INTERNATIONAL LIMITED
(the `Company')
(Incorporated in Bermuda with limited liability)
PLACING OF EXISTING SHARES
AND
SUBSCRIPTION FOR NEW SHARES
Chongqing Industrial Limited (the `Vendor') has agreed to place,
through its placing agent, Tai Fook Securities Company Limited (`Tai
Fook'), 406,850,000 existing ordinary shares (`Placing Shares') of
HK$0.10 each in the share capital of the Company (`Shares') to
independent investors at a price of HK$0.52 per Share (`Placing') and
the Vendor will subscribe for 643,800,000 new Shares (`Subscription
Shares') at the price of HK$0.52 per Share (`Subscription').
The Placing is fully underwritten by Tai Fook.
The Placing Shares represent approximately 12.64% of the existing
issued share capital of the Company of 3,219,201,978 Shares and
approximately 10.53% of the Company's issued share capital as
enlarged by the Subscription of 643,800,000 new Shares. The net
proceeds from the Subscription of approximately HK$330 million will
be used as general working capital for the Company and its
subsidiaries (the `Group') (as set out in greater detail below).
The Vendor together with persons acting in concert have
approximately a 36.81% interest in the Company as at the date of this
announcement.
The shareholding of the Vendor together with persons acting in
concert will be reduced from approximately 36.81% to approximately
24.17% immediately upon completion of the Placing and will be
increased from approximately 24.17% to approximately 36.81%
immediately upon completion of the Subscription.
Trading in the Shares was suspended on 16th February, 2000 at the
request of the Company pending the issue of this announcement and
application has been made to the Stock Exchange of Hong Kong Limited
(the `Stock Exchange') for the resumption of trading of the Shares
from 10:00 a.m. on 17th February, 2000.
A. PLACING OF 406,850,000 EXISTING SHARES
A placing agreement dated 15th February, 2000 (the `Placing
Agreement') was entered into between the Vendor and Tai Fook
containing the following terms:-
Vendor
The Vendor, Chongqing Industrial Limited, is the controlling
shareholder of the Company.
Placing agent and Underwriter
Tai Fook, who is independent of, not connected with the directors,
chief executive or substantial shareholders of the Company and any of
its subsidiaries or any of their respective associates (as defined
under the Rules (the `Listing Rules') Governing the Listing of
Securities on the Stock Exchange). Tai Fook would receive placement
commission of 2% on the gross proceeds of the Placing which is
approximately HK$4.5 million.
Placees
The placees (which will be six or more individual, corporate and/or
institutional investors) will be independent of, not connected and
not acting in concert with the directors, chief executive or
substantial shareholders of the Company and any of its subsidiaries
or any of their respective associates. It is expected that no placee
will become a substantial shareholder of the Company as a result of
the Placing.
Placing price
HK$0.52 per Placing Share. This price was agreed after arm's length
negotiations and represents (i) a discount of approximately 23.53% to
the closing price of HK$0.68 per Share quoted on the Stock Exchange
on 15th February, 2000, being the last trading day of the Shares
immediately before the date of this announcement; and (ii) a discount
of approximately 15.58% over the average closing price of
approximately HK$0.616 per Share as quoted on the Stock Exchange from
31st January, 2000 to 15th February, 2000, both dates inclusive,
being the last ten trading days of the Shares immediately before the
Suspension Date.
Rights
The Placing Shares will rank equally with the existing Shares.
Number of existing Shares to be placed
406,850,000 Shares to be placed, representing approximately 12.64%
of the existing issued share capital of the Company of 3,219,201,978
Shares and approximately 10.53% of the issued capital of the Company
as enlarged by the Subscription of 643,800,000 new Shares. The
Placing is fully underwritten by Tai Fook.
Completion of the Placing
The Placing is conditional on resumption of trading of the Shares no
later than the second business day after the date of the Placing
Agreement.
Completion of the Placing shall take place on or before 10:30 a.m.
on the first business day following fulfillment of the condition of
the Placing.
B. SUBSCRIPTION OF 643,800,000 NEW SHARES
A Subscription Agreement dated 15th February, 2000 between the
Vendor and the Company containing the following terms:-
Subscriber
The Vendor
Number of new Shares to be subscribed for
The Company will issue 643,800,000 new Shares and the Vendor will
subscribe for them, representing approximately 20% of the existing
issued share capital of the Company and approximately 16.67% of the
issued share capital of the Company as enlarged by the Subscription.
Subscription Price
HK$0.52 per Subscription Share. The Company will bear the costs and
expenses in connection with the Placing and the Subscription. The
estimated expenses for the Placing and the Subscription will be
approximately HK$4.5 million. The net proceeds of the Subscription is
approximately HK$330 million.
General Mandate to issue Subscription Shares
The Subscription Shares will be issued pursuant to the general
mandate to allot, issue and deal with Shares granted to the directors
of the Company by resolution of its shareholders passed at the
Company's special general meeting held on 15th February, 2000 with
the total number of issued shares at 3,219,201,978 on that date.
Ranking of the Subscription Shares
The Subscription Shares will rank equally with Shares of the Company
in issue at the time of issue and allotment of the Subscription
Shares.
Use of Proceeds
On 17th January, 2000, the Company has completed a placing of
existing shares and subscription for new shares to the Vendor. The
net proceeds from that subscription which was approximately HK$224
million was used by the Company as additional working capital and for
investment to further fulfil the Group's diversification plan into
technology related fields.
The net proceeds from the Subscription of approximately HK$330
million will be used by the Company as additional working capital,
for investment to fulfil the Group's diversification plan into
technology related fields and for expansion of the Group's business
including investing in other strategic investments, if opportunity
arises. The Company is now considering an investment opportunity. If
a decision is made by the Company in respect thereof which will
result in the investment constituting a discloseable transaction of
the Company at that time, the Company will comply with the applicable
requirements of the Listing Rules.
The principal activity of the Company is investment holding whilst
the principal activities of its subsidiaries are general trading,
property holding, packaging and investment holding. The trading
business of the Company's subsidiaries is mainly in the PRC and
includes but not limited to trading in audio-visual products and
components, trading in industrial equipment, trading in automobile
parts, trading in agricultural products and trading in metal and
plastic materials.
Condition of the Subscription
The Subscription is conditional upon:
(a) completion of the Placing; and
(b) the Listing Committee of the Stock Exchange granting listing of, and
permission to deal in, the Subscription Shares to be issued under the
Subscription; and
(c) waiver from the obligation of the Vendor together with persons
acting in concert with it to make a general offer to the shareholders
of the Company under Rule 26 of the Hong Kong Codes on Takeovers and
Mergers (the `Code') as a result of the Placing and the Subscription
being granted by the executive director of the Corporate Finance
Division of the Securities and Futures Commission (`SFC') (the
`Executive').
Completion
Under the Listing Rules, the Subscription must be completed within
14 days from the date of the Placing and Subscription Agreement, that
is, on or before 29th February, 2000 (or such later date as the
Company, the Vendor and the Placing Agent may agree such agreement
not to unreasonably withheld or delayed and subject to compliance
with the Listing Rules), failing which the Subscription shall cease
and terminate.
Application for listing
Application will be made by the Company to the Stock Exchange to
grant the listing of and permission to deal in the Subscription
Shares.
Application has been made with the SFC for a waiver from the
obligation of the Vendor together with persons acting in concert with
it to make a general offer to the shareholders of the Company under
Rule 26 of the Code being granted by the Executive.
C. EFFECTS OF THE PLACING AND THE SUBSCRIPTION
The shareholding of the Vendor in the Company immediately before
completion of the Placing, immediately after completion of the
Placing but before completion of the Subscription, and immediately
after completion of both the Placing and the Subscription are and
will be as follows:-
Shareholding in the No. of Shares in
Company held by the the Company held by
Vendor together the Vendor together
with persons acting with persons acting
in concert (Note) in concert (Note)
Immediately before 36.81% 1,184,983,360
the Placing and the
Subscription
Immediately after 24.17% 778,133,360
the Placing but
before the
Subscription
Immediately after 36.81% 1,421,933,360
the Placing and the
Subscription
Note: Assumes that other than the Subscription Shares, no new Shares
are issued or purchased by the Company and other than the Placing
Shares no Shares are sold or purchased by the Vendor, in each case
after the date of this announcement up to the date of the completion
of the Subscription. Save and except for Shares to be issued on
exercise of the outstanding options and warrants and the Subscription
Shares, the Company has no intention to issue any new share or to
purchase any of its Shares.
D. REASON FOR THE PLACING AND SUBSCRIPTION
In view of the current market conditions, the directors of the
Company consider that the Placing and Subscription together
represents a good opportunity to raise capital for the Company while
broadening the shareholders base and the capital base of the Company
and also enables the Group to have a higher level of working capital
to further diversify its business.
E. ADJUSTMENT OF SUBSCRIPTION PRICE OF WARRANTS
As at the date of this announcement, the Company has outstanding
warrants carrying rights to subscribe up to HK$116,150,000 for Shares
at a subscription price of HK$0.22 per Share (subject to adjustment)
for at any time up to 15th September, 2001.
The issue of the Subscription Shares will result in an adjustment to
the subscription price of the warrants.
Subject to completion of the Placing, the issue of the Placing
Shares will result in an adjustment to the subscription price of the
warrants from HK$0.22 to HK$0.21 per Share which has been certified
by Tai Fook Capital Limited, to be appropriate in accordance with the
terms of the warrant instrument.
F. GENERAL
Mr. Cheung Chung Kiu, the chairman and managing director of the
Company is the beneficial owner of the entire interest in the
Vendor.
Trading in the Shares was suspended on 16th February, 2000 at the
request of the Company pending the issue of this announcement and
application has been made to the Stock Exchange for the resumption of
trading of the Shares from 10:00 a.m. on 17th February, 2000.
By order of the board of directors of
Yugang International Limited
Cheung Chung Kiu
Chairman
Hong Kong, 16th February, 2000
The directors of the Company jointly and severally accept full
responsibility for the accuracy of the information contained in this
announcement and confirm, having made all reasonable enquiries, that
to the best of their knowledge, opinions expressed in this
announcement, have been arrived at after due and careful
consideration and there are no other facts not contained in this
announcement the omission of which would make any statement in this
announcement misleading.
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